Cane Company manufactures two products called Alpha and Beta that sell for $155 and $115, respectively....
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Cane Company manufactures two products called Alpha and Betathat sell for $155 and $115, respectively. Each product uses onlyone type of raw material that costs $6 per pound. The company hasthe capacity to annually produce 110,000 units of each product. Itsaverage cost per unit for each product at this level of activityare given below:
Alpha Beta Direct materials $ 24 $ 12 Direct labor 23 26 Variable manufacturing overhead 22 12 Traceable fixed manufacturing overhead 23 25 Variable selling expenses 19 15 Common fixed expenses 22 17 Total cost per unit $ 133 $ 107
The company considers its traceable fixed manufacturing overheadto be avoidable, whereas its common fixed expenses are unavoidableand have been allocated to products based on sales dollars.
11. How many pounds of raw material are needed to make one unitof each of the two products?
12. What contribution margin per pound of raw material is earnedby each of the two products? (Round your answers to 2decimal places.)
Cane Company manufactures two products called Alpha and Betathat sell for $155 and $115, respectively. Each product uses onlyone type of raw material that costs $6 per pound. The company hasthe capacity to annually produce 110,000 units of each product. Itsaverage cost per unit for each product at this level of activityare given below:
| Alpha | Beta | |||||||
| Direct materials | $ | 24 | $ | 12 | ||||
| Direct labor | 23 | 26 | ||||||
| Variable manufacturing overhead | 22 | 12 | ||||||
| Traceable fixed manufacturing overhead | 23 | 25 | ||||||
| Variable selling expenses | 19 | 15 | ||||||
| Common fixed expenses | 22 | 17 | ||||||
| Total cost per unit | $ | 133 | $ | 107 | ||||
The company considers its traceable fixed manufacturing overheadto be avoidable, whereas its common fixed expenses are unavoidableand have been allocated to products based on sales dollars.
11. How many pounds of raw material are needed to make one unitof each of the two products?
12. What contribution margin per pound of raw material is earnedby each of the two products? (Round your answers to 2decimal places.)
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